So many gems from Jeremy Grantham’s latest monthly letter.Here he is on politics, political appointees, and the Fed:
Let me make a simple point for all of those who decry any and all governmental interference: in my opinion, capitalism has been manipulated far more, and more dangerously, by the last two Republican-appointed Fed bosses than everything else added together. It is naïve, if fashionable, to blame the rather lame currentAdministration for all of our problems.
They inherited a cake already baked or, better, “half baked,” and the master bakers were the current and former Fed bosses, and the underbaker (not quite an undertaker, but nearly) was Hank Paulson with his “contained” sub-prime crisis. Aided by Timothy Geithner at the New York Fed, they first did absolutely nothing for two years and then laid the groundwork for a bailout, the scale of which neither Democrats nor Republicans had ever dreamed! And of all of the many mistakes of the current Administration, the worst, in my opinion, are directly related to this fiasco: the inexplicable choice of Geithner, who was actually placed at the scene of the crime in New York and whose fingerprints were on the murder weapon, and the reappointment of … gulp … Bernanke himself, about whose reappointment much juicy Republican criticism was made, all of it completely justified in my view. There may, however, be a small ray of hope. The recent Fed appointee, Vice Chair Janet Yellen, said not long ago, “Of course asset bubbles must be taken seriously!”
She also said, “It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk taking.” Yes, sir! Or rather, madam! A promising start. These sentiments, of course, are completely contrary to the oft-repeated policies of Greenspan and his chief acolyte, Bernanke. Perhaps she will slap some good sense into her boss on this issue.
For what it’s worth, we’re pretty sure that the latest crop of GOPers is as disgusted by Dubya-style capitalism as anyone else.
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